Lenovo May Lose Hang Seng Index Status

Lenovo is increasingly at risk of being dropped from Hong Kong’s benchmark equity index as its shares tumble more than any other technology company in the world, according to Bloomberg.

The Chinese computer maker has fallen 56 percent since being added to the Hang Seng Index in March 2013, wiping out $5.8 billion in value. Companies removed from the gauge in the past decade had seen their value fall a median of 48 percent before being excluded.

Lenovo sank to its lowest since October 2009 on Monday as a U.S. ban on ZTE and a global selloff by hardware manufacturers added to jitters about China’s technology sector. The stock is one of the most shorted on the Hang Seng Index: 13.8 percent of its shares available for trade on loan to short-sellers.

Lenovo was previously dropped from the Hang Seng Index in 2006, six years after first joining. Its decline since it was added back in 2013 is the biggest on the 171-member Bloomberg World Technology Index.

Concern is rising that Lenovo will have to write off the value of its intangible assets, as smartphone unit Motorola is delivering lackluster results, according to Kevin Chen, Hong Kong-based analyst with Mizuho Securities Asia. The company’s data center business is being closely watched as that’s the most promising area for helping a turnaround and cushioning the stock’s decline, he said. “Last year was supposed to be the year for Lenovo to hit the bottom and start seeing improvement. But we didn’t see it,“ Chen said. “Investors are losing patience.“